The stock jumped 17 percent at A$12.89 at the close of
trade, the most since February 2009. Larger rival Harvey Norman
Holdings Ltd. climbed 5.9 percent to A$2.33, the biggest gain in
18 months. Consumer discretionary stocks were the best
performers in the benchmark S&P/ASX 200 index today.

JB Hi-Fi’s first-half net income came to A$82 million ($84
million), the Melbourne-based company said in a statement today,
compared with the A$75 million median estimate of seven analysts
surveyed by Bloomberg. Australian electrical goods sales
struggled over the past year as the strength of the nation’s
dollar pushed down selling prices of imported products while
weak consumer sentiment kept a lid on demand.

“The discounting activity we saw a year ago was
predominantly due to inventory clearance, and was very
irrational and short-term,” Andrew McLennan, an analyst at
Commonwealth Bank of Australia who rates JB Hi-Fi neutral, said
by phone from Sydney. “Maybe we all got a bit too carried away
on the downside because of what turned out to be a short-term
characteristic.”

Full-year net income will be between A$108 million and
A$112 million, JB Hi-Fi forecast today, above the A$103 million
average of 14 analyst estimates compiled by Bloomberg.

Gross margin -- the gap between the prices that stores buy
and sell goods -- widened 0.3 percent and will continue to
improve after a period of heavy discounting last year, the
company said.

Myer Gains

Sales at JB Hi-Fi grew 2.3 percent to A$1.82 billion, while
those from stores open at least 12 months fell 3.5 percent, the
company said. Televisions, which the company said were declining
in price by as much as 25 percent in a December 2011 trading
update, were still a drag on sales growth, Terry Smart, chief
executive officer, said in a statement today.

The end of discounting for inventory clearance should
benefit Harvey Norman, Commonwealth’s McLennan says. Australia’s
largest electrical chain by sales is due to report earnings on
Feb. 28.

“Conditions remain tough,” he said, “but that discrete
period of inventory liquidation has completed.”